The US unemployment rate soared to a 25-year high in February after 651,000 jobs were lost as the economic downturn tightened its grip.
The fall was roughly in line with expectations but at 8.1pc, the unemployment rate was higher than the 7.9pc predicted by economists, and an increase from 7.6pc in January. “The jump in unemployment was extraordinary,” said Stephen Pope, chief global market strategist at Cantor Fitzgerald.
It was the 14th consecutive month that the US economy shed jobs, and the third month in a row that non-farm payrolls dropped by more than 650,000 as the country grapples with a sharp downturn. Payrolls have fallen by 4.4m since December 2007, with 2.6m coming in the last four months. The number of unemployed people in the US is 12.5m according to the figures from the US Bureau of Labor Statistics
Shoppers stay at home in February, worst retail figures for 13 years showBy comparison, the latest UK figures show the number of jobless was just under 2m in December, and the unemployment rate reached an 11-year high of 6.3pc. Unemployment is a lagging indicator, and some fear that the UK rate could rise to 10pc and above by the end of 2010.
The US figures underline the pressure on President Barack Obama to get his $787bn (£556bn) stimulus plan working. Speaking after the publication of the numbers, the US, Representative Carolyn Maloney, chairman of the congressional Joint Economic Committee, said: “The magnitude of these losses indicates that additional measures will likely be needed. As unemployment continues to rise, our foreclosure crisis will only grow worse.”
Job losses were widespread across nearly all major industry sectors, but manufacturing and construction were the worst hit, with 168,000 and 104,000 respective job losses in February. As in the UK, the recession is hitting men harder than women, with unemployment among the latter group growing at a slower pace.
“Though largely anticipated, the labour market data released today provides further evidence of worsening economic conditions in the United States. Even greater losses are expected for the near-term too though,” said Arek Ohanissian at the Centre for Economics and Business Research.
The news had little impact on the currency and equity markets.